quasi-public goods, natural resource economics, public policy, computational economics and other stuff I like

Agriculture, Public Investment, and the Tea Party

The most recent haggling over the farm bill got me a little depressed. I’ve always thought of the farm bill as a pretty impressive piece of legislation, a sensible solution to a variety of problems. It was a legislation authorizing funding for programs that benefit both the rural and urban poor in some pretty common sense ways…but more about that later. The point is, I’ve been waffling over whether to attempt a post on the hardline right’s (tea party) mantra of ‘get government out of the way’. This farm bill bullshit has pushed me over the edge.

I think it’s pretty clear how the tea-party’s agenda would hurt the urban poor (who happen to be disproportionately people of color). I also think it’s pretty clear that this is what the tea party really wants…but more on that later. I don’t feel that the media has paid much attention to how tea-party candidates are bad for the economic stability of rural America.

While ‘thinking’ and ‘feeling’ are fine pursuits, I’m a firm believer that one’s policy opinions should be based in fact and empirically supported…so here are some facts that speak to me:

$76.8 billion – total indemnities on federally subsidized crop insurance in the U.S.

$1.3 Trillion – 2012 Budget for the National Institute of Food and Agriculture. This money that is passed through Land Grant Universities to support agricultural research, outreach and education…making it’s way into rural communities through a variety of channels:

It helps pay the salaries of county extension agents who work directly with farmers and ranchers in their districts to bring productivity-boosting ag research out of the university and into the fields.

Anticipating the obvious question, “hey that sounds nice but what do we get for that $1.3 trillion?” If you download the recent USDA report you can read about:

County extension agents in Arkansas using University of Arkansas research on hybrid selection, fertility management, pest control and irrigation management to improve corn yields to tune of 180 bu/acre…well above the state average of 124 bu/acre

North Dakota State University innovation in sugar beet biofuel production that is expected to be commercially viable by 2015 adding new market channels for the states sugar beet growers as well as adding full-time industrial jobs in rural communities.

A Georgia nursery that increased profitability by $46,000 an acre using wireless remote irrigation sensing technology developed by researchers at the University of Maryland.

Since I’m a graduate of Texas A&M, a Land (and Sea and Space btw) Grant Institution with a well-known commitment to serving the rural communities of Texas through its Ag Extension programs, here are a few more regionally specific facts that I find compelling:

Crop Insurance
It’s fairly well known that Texas agriculture depends heavily on crop insurance. In Brazos County Texas, the federal government paid out $16.3 million in indemnities from 1995-2012. Over that same period farmers paid $4.4 million into the program. After subtracting out administrative costs, the cost to the government of providing crop insurance for farmers in Brazos County, TX was roughly $14 million.

I suppose reasonable people could argue over whether that was $14 million well spent. A hardcore market enthusiast might argue that subsidized crop insurance incentivizes unnecessary (and potentially costly) risk taking. As an economist I recognize the potentially distortionary nature of subsidized crop insurance. As an empiricist I also recognize the reality that crop insurance provides an important safety net for a number of small farm operators with cash flow issues who are one catastrophic whether event away from bankruptcy. Since, in most other lines of business, diversification and firm size acts as hedges against risk, I think a likely consequence of terminating subsidized crop insurance would be (accelerated) consolidation of agricultural production in the hands of large agribusiness firms and decreasing viability of family farms. If you disagree with me, fine…just show me your evidence-based line of reasoning.

Research, Outreach and Education
In 2011 (I wish I had the time to dig through some more recent financial reports but 2011 was the first one that ‘the google’ spit back at me) the state of Texas received $25.9 million in federal funds for the line item Cooperative Extension Service.”

Education

On of the more visible roles of the Ag Extension program (at least in agriculturally oriented communities) is support of the 4-H program. In Texas, in 2011, Ag Extension funding allowed 4-H participation by 662,027 youth ages 5 to 18 (10% of this age group in Texas) and 24,604 adult volunteers. Annual scholarships awarded to 4-H youth exceeded $2 million.

Research and Outreach

A major thrust of Ag Extension is to make university research and innovation available for the benefit of Texas farmers. The Texas A&M Agrilife Extension Office has a publication out called The Land Grant Legacy in the Lone Star State, it’s an interesting read. Here are a few things in it that caught my eye:

In 1967 Luther Bird, a cotton breeder with the TAMU Experiment Station, released the first multi-adversity resistant (MAR) cotton varieties, which carried genetic traits conferring resistance to major cotton diseases and other stresses. Eventually, the MAR program released 300 germplasm lines and 12 TAMCOT varieties and led to the development of 29 commercial cotton varieties that had a long-term economic impact on cotton production and profitability in Texas and the Southeastern U.S. cotton belt, (pg.76).

In 1968 Semi-dwarf wheatwas developed by Experiment Station and USDA Agriculture Research Service agronomists I.M. Atkins, K.B. Porter and O.G. Merkle (pg. 77). This genetic system brought increased yields by making wheat less susceptible to weather damage and increased production per acre, allowing the world’s wheat growers to feed millions more people on the same land resources.

In 2009, Charles Rush, a plant pathology professor and researcher at the Agrilife Extension and Research Center in Amarillo, reaches a breakthrough after 2 years of research on zebra chip disease, which causes potatoes to be unsuitable for making potato chips. His research on the potato psyllid, the insect vector, contributes to better disease management and reduced pesticide use and is critically important to the state’s large potato crop.

The Wrap-Up
I’ve tried here to make a fact-based case for public investment in i) an ag safety net through subsidized crop insurance and ii) ag research, outreach and education. If the tea-party really thinks rural communities would be better off without this public investment ( because only awesome things happen when you get government out of the way ) they should explain the mechanisms by which cutting these important sources of funding will make farmers, ranchers and their families better off.

Maybe Texas farmers and rural residents would be fine if we substantially reduced federal funding for crop insurance, agricultural research and education? They’re a resourceful people after all. Maybe we should make those cuts even if there are some adverse impacts to agriculture because, ya know, sometimes hard budgetary choices need to be made? I don’t know the answers to either of these questions but I know a) federal funding impacts rural communities in lots of direct and indirect ways and b) these impacts matter. The magnitude of these impacts is an open empirical question and whether they matter enough to tip some decision scale is a policy question.

As a scientist I like questions. We learn about the world by posing research questions then doing our best to answer them. This tea party business of ‘get government out of the way’ is intellectual laziness at its finest. It leaves no room for asking and answering tough questions about allocation of scarce dollars.